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Would You Buy American?

October 12, 2011
In the past, I have blogged about the “Buy American Movement.” I guess we can call it a movement now that more and more businesses, politicians, media outlets, and POF (plain ole folks) are talking about it. All this week, ABC Nightly News With Diane Sawyer  has been running a piece called How to Build a Made in America Home. They have highlighted a home being built in Bozeman, Montana. The builder decided he was going to build it only with items made right here in the U. S. It took a lot of leg work and a great deal of imagination, but he was able to build the house with only American made products.

You should have seen the list of parts he needed and the corresponding list of companies he found who made those parts over here. Some of the items were more expensive than imported items, others were less. A box of American-made nails, for example, cost $5 more than the imported brand. However, the U. S. made nails were double zinc coated which meant they were more rust resistant. Additionally, they clogged the carpenters’ nail guns much less often. That more than compensated for the additional cost.

The house is expected to cost about 1% - 2% more than a foreign-sourced one. Now, here’s the hook that is going to catch everyone’s attention whether they come from the “Tea Party” or the “Occupy Wall Street” end of the spectrum. If every builder over here bought just 5% more materials made in American, that would create 220,000 jobs!! You think he is going to have any trouble selling a house with that kind of story?

This led me to wondering how does this apply to our industry? First of all, let me assure you, I am not an isolationist. If we try to cut ourselves off from the rest of the trading world by not buying their products, they will have no incentive to buy stuff we make. Sorry, I don’t believe U. S. manufacturers can survive by selling their output only to consumers in the States. Nor do I believe everything we buy should come from off-shore because their products are less expensive. By doing that, we lose the ability to “make” anything. A precarious non-competitive position, at best.

No, there has to be a happy medium. For example, with the price of transportation, raw goods, and foreign labor increasing daily, does it really make sense to ship “whole” goods into the States? I feel it can be as profitable, if not more so, to ship in containers of parts and assemble them here, instead. I am sure every manufacturer who does this has run the numbers; so maybe I am wrong. But, have they considered the hidden costs? Remember those American-made nails that don’t clog nail guns. In our industry that is equivalent to the poor quality goods that must be replaced under warranty. That adds something to the cost of goods!

There is another hidden cost, though, that didn’t rear its head until recently. For several years, O. W. Lee, Homecrest and Telescope have tried to convince all of us that “Made in America” would resonate with customers. In my experience, not so much. That is, not until the recession/depression/downturn began to affect everyone. Especially in the last few months, we have had customers come in asking, “Where was this made?” Customers have actually turned their noses up on our Chinese-made cast aluminum in favor of items which were assembled here, at least. When a customer doesn’t buy a manufacturer’s furniture because of where it was made, that is a true hidden cost. I expect it to happen more and more.

We aren’t as big as the construction industry; however, “Casual Living” reported that according to numbers from the U.S. Customs Service, U.S. Census Bureau and the U.S. International Trade Commission, imports of outdoor furniture totaled $2.33 billion in 2010. Let’s see, if we spent just 5% of that on U. S. goods that would come to slightly over $100 million. The average U. S. salary(including a 25% burden for benefits, etc.) is about $50,000/year. Why, that comes to about 2,000 jobs. Not a lot, but you know the answer to the old joke, “What would you have if 2,000 politicians had drowned on the Titanic? A pretty good start!”

Yours in confused retailing, Bruce